China Auto Logistics' 2012 Revenue Grew 31% Year Over Year Led by Another Record Year in Luxury Auto Sales

China Auto Logistics' 2012 Revenue Grew 31% Year Over Year Led by Another 
Record Year in Luxury Auto Sales 
Lower Margins and Impairment Charges Related to the Downsizing of
Goodcar Operations Reduced Net Income Despite Continued Growth in
High Margin Financing Services; Luxury Auto Sales Outlook Remains
Strong 
2012 Year End Investor Conference Call to Be Held Tuesday, April 2nd
at 8:00am ET 
TIANJIN, CHINA -- (Marketwire) -- 04/01/13 --  China Auto Logistics
Inc. (the "Company") (NASDAQ: CALI), a top seller in China of luxury
imported automobiles, a leading provider of auto-related services,
and developer and operator of a leading automobile portal and
auto-related websites, today reported another year of record revenues
in 2012 based primarily on continued strong luxury auto sales. At the
same time, the Company experienced a year over year reduction in
margins and net income mainly resulting from a planned substantial
decrease in web-based advertising sales, impairment charges related
to its planned termination of Goodcar advertising services, and a
margin lowering product mix shift in its luxury imported auto sales
business aimed at maintaining the Company's industry leadership
position. 
Financial Highlights 


 
--  2012 revenues grew 30.78% compared with the prior year to
    $591,315,104, led by luxury imported auto sales which grew 32.43% to
    $581,292,369, and Financing Services sales which advanced 72.72% to
    $7,085,357.
--  Income from operations in 2012, as reported, was $3,582,194, compared
    with $11,377,088 in 2011. Non-GAAP adjusted income from operations in
    2012 was $8,243,395, down approximately 33% from $12,270,671 a year
    earlier. Non-GAAP figures exclude impairment charges in 2012 of
    $4,661,201, for goodwill and intangible assets related to the
    downsizing of Goodcar, and $893,583 in 2011.
--  While the Company realized increased operating income from Financing
    Services and Automobile Value Added Services in 2012, operating income
    from Web-based Advertising Services decreased as planned from
    approximately $4.4 million in 2011, to a loss of approximately $4.2
    million in 2012, due to the Company's focus shifting away from web
    advertising and the impairment charge of $4,661,201. Addition
ally,
    lower margins on sales of automobiles (as explained below), which was
    partially offset by increased volume sold, reduced the contribution to
    operating income from this segment by approximately $.7 million in
    2012.
--  As reported, net income attributable to shareholders in 2012 was
    $2,567,087, or $0.69 per share. On a non-GAAP basis, excluding the
    impairment loss of goodwill and intangible assets of $3,947,040
    (impairment charge of $4,661,201 less income tax benefit of $714,161),
    adjusted net income attributable to shareholders in 2012 was
    $6,514,127, or $1.76 per share. Net income attributable to
    shareholders in 2011 was $8,032,615, or $2.34 per share. On a non-GAAP
    basis, excluding the impairment loss of goodwill and intangible assets
    of $893,583 (impairment charge of $893,583 less income tax benefit of
    $0), adjusted net income attributable to shareholders in 2011 was
    $8,926,198 or $2.60 per share. Reflecting the Company's 1 for 6
    reverse share split in 2012, the weighted average number of shares
    outstanding as of December 31, 2012 was 3,694,394, compared with
    3,437,740 shares a year earlier.

  
Operations Overview 
The major contribution to revenues in 2012 was from the Company's
Sales of Automobiles segment. During the year, the Company sold 6,588
automobiles, compared with 4,190 in 2011, a gain in unit volume of
just over 57%. At the same time, the average unit selling price in
2012 decreased just over 16% to approximately $88,000 from $105,000 a
year earlier. In response to competition from smaller dealers, and
with an aim of maintaining leadership in the market, during the year
the Company lowered selling prices and gross margins, while also
experiencing higher demand for the lower end luxury models of its top
selling brands, namely Toyota, BMW and Mercedes. Based on several
studies, the Company is optimistic that the growth rate in China for
luxury autos will continue to outpace the mainstream auto market, and
that China will shortly become the world's top market for most major
luxury autos. With this in mind, continuing the rapid growth of this
business remains the Company's key focus.  
The sharpest sales gain during the year came from the Company's
Financing Services business, which contributed approximately $2.98
million to income from operations on just under $7.1 million in
revenues. The Company had an aggregate amount of approximately $135
million in credit lines to support this business as of December 31,
2012. During the year, banks tightened requirements for credit lines,
with outcomes such as requiring personal guarantees by the Company's
executives and directors or major customers and suppliers.
Nevertheless, the Company does not foresee any difficulty at this
time in accessing credit lines or other bank facilities and maintains
good relationships with several major commercial banks in China. The
Company also engages in negotiations regularly with these and other
banks to obtain bigger lines of credit on more favorable terms. 
In 2012 the Company pursued its strategic decision to limit and/or
exit web-based advertising activities which, in prior years, were key
high margin contributors to its profits. As a consequence, the
contribution to revenue from this sector was reduced to under $1
million during the year and operating income was negatively impacted.
As the Company has shifted from generating advertising revenue on its
websites to utilizing them as marketing tools for current and
potential customers, management believes opportunities are being
created for the growth of other current and potential products and
services which will outweigh the sacrifice of revenues. In
conjunction with these decisions, the Company ceased all Goodcar
advertising operations, but continues to operate the website to
promote its products in other segments. The Company also reduced its
website coverage to a single city -- the important port city of
Tianjin -- and is reviewing future geographical coverage. During the
year, the contributions to operating income from Auto Mall Management
Services was about flat with the prior year, while the contribution
to operating income from Automobile Value Added Services, which
included terminated Goodcar activities, nevertheless slightly
increased.  
Growth Outlook 
Mr. Tong Shiping, CEO and Chairman of the Company, stated, "Our
decisions with respect to exiting web-based advertising and the
advertising sales and related promotional services of Goodcar stemmed
from recognition of the costs required to remain competitive in these
areas. However, they mainly reflect our decision to remain true to
our growth strategy, which is to allocate whatever resources are
required to continue our leadership in luxury auto sales, around
which we aim to grow higher margin automobile related services
businesses. Maintaining our leadership in luxury auto sales -- which
we strongly believe will continue to be a rapidly growing business in
China -- also was behind the shift in our auto sales mix, which
increased unit sales at the expense of slightly better margins." 
He added, "Especially given the relatively weaker Chinese economy in
2012, we were very pleased with the top line growth 
we achieved based
on continuing strong demand in China for luxury autos. We also had a
further glimpse of our potential for the future in the substantial
growth we achieved in our higher margin Financing Services business.
We did not announce any developments during the year with regard to
other profitable new services we hope to build in the future around
growing awareness of our leadership in luxury auto sales. However, we
did make progress that is continuing in the current year and look
forward to sharing this progress at the appropriate time." 
"All in all," Mr. Tong continued, "we remain very positive about our
future growth outlook, which we believe has yet to be reflected in
our share price." 
Explanation of Non-GAAP Results 
In addition to disclosing financial results in accordance with
accounting principles generally accepted in the United States (GAAP),
this earnings release contains non-GAAP financial measures that the
Company believes are helpful in understanding and comparing past
financial performance and future results. These non-GAAP financial
measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and
reconciliations from these results should be carefully evaluated.
Management believes the non-GAAP financial measures are appropriate
for period to period comparisons in its budget, planning and
evaluation processes, and to show the reader how the Company's
performance compares to other periods.  
Conference Call Invitation 
The Company will discuss 2012 year end results during a live
conference call and webcast on Tuesday, April 2nd at 8:00am ET.  
To participate in the call, interested participants should call
1-877-941-2068 when calling within the United States or
1-480-629-9712 when calling internationally. Please ask for the China
Auto Logistics 2012 Year End Earnings Conference Call, Conference ID:
4609602. There will be a playback available until 04/09/13. To listen
to the playback, please call 1-877-870-5176 when calling within the
United States or 1-858-384-5517 when calling internationally. Use the
Replay Pin Number: 4609602. 
This call is being webcast by ViaVid Broadcasting and can be accessed
by clicking on this link http://public.viavid.com/index.php?id=103982
or at ViaVid's website at http://viavid.com. 
About China Auto Logistics Inc. 
China Auto Logistics Inc. is one of China's top sellers of imported
luxury vehicles, and also manages China's largest imported auto mall
in Tianjin. Additionally, it operates www.cali.com.cn, one of the
leading automobile portals in China, as well as three major websites
serving China's auto dealers and their customers. The Company also
provides a growing variety of "one stop" automobile related services
such as short term dealer financing. Additional information about the
Company is available at www.chinaautologisticsinc.com. 
Information Regarding Forward-Looking Statements 
Except for historical information contained herein, the statements in
this press release are forward-looking statements that are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties, which may cause our actual
results in future periods to differ materially from forecasted
results. These risks and uncertainties include, among other things,
product demand, market competition, and risks inherent in our
operations. These and other risks are described in our filings with
the U.S. Securities and Exchange Commission. 


 
                 CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES                 
                     CONSOLIDATED STATEMENTS OF INCOME                      
                                                                            
                                                Year Ended December 31,     
                                                 2012             2011      
                                           ---------------  --------------- 
                                                                            
Net revenue                                $   591,315,104  $   452,149,602 
Cost of revenue                                580,057,718      436,010,820 
                                           ---------------  --------------- 
    Gross profit                                11,257,386       16,138,782 
                                           ---------------  --------------- 
                                                                            
Operating expenses:                                                         
  Selling and marketing                            977,555        1,488,408 
  General and administrative                     2,036,436        2,379,703 
  Impairment loss of goodwill and                                           
   intangible assets                             4,661,201          893,583 
                                           ---------------  --------------- 
    Total operating expenses                     7,675,192        4,761,694 
                                           ---------------  --------------- 
                                                                            
Income from operations                           3,582,194       11,377,088 
                                           ---------------  --------------- 
                                                                            
Other income (expenses):                                                    
  Interest income                                  230,916           63,922 
  Interest expense                                (531,301)         (16,641)
  Loss on disposal of property and                                          
   equipment                                      (172,043)           7,736 
  Gain on forgiveness of debt                    1,139,861                - 
  Miscellaneous                                    (72,922)           3,730 
                                           ---------------  --------------- 
    Total other income                             594,511           58,747 
                                           ---------------  --------------- 
                            
                                                
Income before income taxes                       4,176,705       11,435,835 
                                                                            
Income taxes                                     1,596,179        3,303,177 
                                           ---------------  --------------- 
                                                                            
Net income                                       2,580,526        8,132,658 
                                                                            
Less: Net income attributable to                                            
 noncontrolling interests                           13,439          100,043 
                                           ---------------  --------------- 
                                                                            
Net income attributable to shareholders of                                  
 China Auto Logistics Inc.                 $     2,567,087  $     8,032,615 
                                           ===============  =============== 
                                                                            
Earnings per share attributable to                                          
 shareholders of China Auto Logistics Inc.                                  
  - basic and diluted                      $          0.69  $          2
.34 
                                           ===============  =============== 
                                                                            
Weighted average number of common shares                                    
 outstanding                                                                
  - basic and diluted                            3,694,394        3,437,740 
                                           ===============  =============== 
                                                                            
                                                                            
                 CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES                 
                         CONSOLIDATED BALANCE SHEETS                        
                                                                            
                                                       December 31,         
                                                   2012            2011     
                                             --------------- ---------------
ASSETS:                                                                     
Current assets:                                                             
  Cash and cash equivalents                  $     8,888,749 $     8,184,793
  Restricted cash                                 27,015,351      18,805,876
  Accounts receivable - trade, net of                                       
   allowance for doubtful accounts of $0                                    
   and $2,796 in 2012 and 2011,                                             
   respectively                                            -         107,936
  Receivables related to financing services       57,134,815      89,252,244
  Notes receivable                                 1,587,024       4,761,225
  Inventories                                     27,141,004      28,702,113
  Advances to suppliers                           43,019,343      44,746,804
  Prepaid expenses                                    19,071         141,665
  Value added tax receivable                         338,513         625,724
  Deferred tax assets                                714,161               -
                                             --------------- ---------------
    Total current assets                         165,858,031     195,328,380
                                                                            
Property and equipment, net                          314,126         642,672
Goodwill                                                   -       3,736,573
Intangible assets, net                                     -       1,419,830
Other assets                                          23,559          37,637
                                             --------------- ---------------
    Total assets                             $   166,195,716 $   201,165,092
                                             =============== ===============
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY:                                       
Current liabilities:                                                        
  Lines of credit related to financing                                      
   services                                  $    51,528,018 $    87,710,957
  Short term borrowings                           19,673,128       4,285,102
  Accounts payable                                         -           1,566
  Notes payable to suppliers                      12,696,196               -
  Accrued expenses                                   356,114         446,264
  Customer deposits                               19,131,420      46,865,945
  Deferred revenue                                   241,598         319,974
  Due to shareholders                              2,156,166       3,296,548
  Due to director                                    512,023          22,316
  Income tax payable                                 400,932       1,161,664
                                             --------------- ---------------
    Total current liabilities                    106,695,595     144,110,336
                                                                            
Deferred tax liability                                     -         359,342
                                             --------------- ---------------
    Total liabilities                            106,695,595     144,469,678
                                             --------------- ---------------
                                                                            
                                                                            
                 CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES                 
                         CONSOLIDATED BALANCE SHEETS                        
                                 (Continued)                                
                                                                            
                                                       December 31,         
                                                   2012            2011     
                                             --------------- ---------------
                                                                            
Equity:                                                                     
China Auto Logistics Inc. shareholders'                                     
 equity:                                                                    
  Preferred stock, $0.001 par value,                                        
   5,000,000 shares authorized, none issued                                 
   and outstanding                                         -               -
  Common stock, $0.001 par value, 95,000,000                                
   shares authorized, 3,694,394 shares issued                               
   and outstanding as of December 31, 2012                                  
   and 2011                                            3,694           3,694
  Additional paid-in capital                      21,994,074      21,994,074
  Accumulated other comprehensive income           5,923,398       5,699,444
  Retained earnings                               31,006,409      28,439,322
                                             --------------- ---------------
    Total China Auto Logistics Inc.                                         
     shareholders' equity                         58,927,575      56,136,534
Noncontrolling interests                             572,546         558,880
                                             --------------- ---------------
    Total equity                                  59,500,121      56,695,414
                                             --------------- ---------------
                                                                            
    Total liabilities and shareholders'                                     
     equity                                  $   166,195,716 $   201,165,092
                                             =============== ===============

  
Contacts: 
Sun Jiazhen
sjz_cali@126.com  
Ken Donenfeld
DGI Investor Relations Inc.
kdonenfeld@dgiir.com 
Tel: 212-425-5700
Fax: 646-381-9727